Alibaba (NYSE: BABA) placed big bets on the growth of the Chinese rural market. They’ve invested billions of dollars in outpost service hubs.
The growth potential in China’s countryside now outpaces the largest cities. This is true even though less than 10% of online purchases made on Alibaba are from rural customers. The e-commerce giant estimates the potential market will grow to US$74 billion over the next few years.
JD.com, Alibaba’s main local competitor, also said they are focusing on e-commerce in rural areas. This new market seems exciting to tap into, but future returns are uncertain.
“We don’t know when our rural e-commerce operations will become profitable, but there’s value in what we’re doing, there’s consumer demand,” said Gao Hongbing, director of Alibaba’s research arm.
Alibaba Expansion Needs Partners
To train the rural population how to browse and buy on Alibaba’s platform, the company has come up with a team of local “partners”. They’re trained to set up service centers in their home villages. These locals are often older, poorer, and unfamiliar with technology.
Local partners have to go through a recruiting process with a written exam, computer test, and interview. They’re mostly younger, educated people who are familiar with buying products through the internet.
Just 50 jobs were offered to the 1,000 applicants. Training takes place over 2 to 3 days in local government business offices. The workers learn how to educate the rural population and also about Alibaba’s values and history.
One of the local partners, Cheng, opened a village store this week to help locals shop online. “My dreams aren’t that big,” said Cheng, 29. “I just want to live in the countryside and give back to the people there so they can have the same quality of life as people in cities.”
Beijing believes sending these university graduates back to rural areas is also beneficial for local economic development.
More than 100,000 rural service centers will open over the next several years as part of the Alibaba expansion.
Asia’s e-commerce industry as a whole is booming – not just China’s. InvestAsian believes Indonesia presents some of the best opportunities in the region.
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